Peoplesoft buys CRM specialist Vantive

Business applications vendor PeopleSoft took aim at the customer relationship management (CRM) market on Monday as it announced plans to buy Vantive, maker of software used to manage customer service.

The stock-for-stock deal valued at $US433 million gives PeopleSoft a comprehensive electronic-business solution designed to help companies attract, serve, retain and analyse their customers, a PeopleSoft spokesman said.

The two companies' products already are partially integrated following four years of collaboration, said Kip Meintzer, manager of investor relations for PeopleSoft. Vantive's solutions will now be fully integrated into PeopleSoft's Applications for eBusiness solutions and offered to the more than 3,000 PeopleSoft customers worldwide. Vantive's 850 customers will have a single source for integrated business applications.

Meintzer said the addition of Vantive supplies PeopleSoft customers with a missing link to manage customer relationship initiatives and will give them a broad view that combines basic customer information, transactional data and business intelligence.

"It enables companies to view their customers from lead generation to order fulfillment all the way to customer retention," Meintzer said. "Any time you are able to work with more information you are able to work smarter and more efficiently."

Vantive's QuickConnect for PeopleSoft, announced in August, can be used now to integrate Vantive and PeopleSoft products. PeopleSoft also has certified the integration of Vantive and PeopleSoft products under PeopleSoft's Open Integration Framework program. PeopleSoft plans to unveil a combined product strategy for CRM in early 2000.

The close collaboration between the two companies for years had fuelled rumours that they would join forces, said Cassandra Millhouse, who leads market researcher Ovum's CRM practice.

"It's something that has been talked about for a long time. In fact you could say that it was talked about so much that people stopped believing it would happen," Millhouse said.

The acquisition has the potential to rejuvenate PeopleSoft, which has lacked direction recently, Millhouse said. It will also buoy Vantive, which has had several poor quarters, including the third quarter, in which it reported a loss estimated at US$0.17 per share, she said.

In addition, the move will give PeopleSoft a jump on the UBA (universal business applications) market, which Millhouse said is an emerging category served by companies that offer both CRM and ERP (enterprise resource planning) packages.

"The market knew that PeopleSoft had to have something in the front office, and Vantive is probably the best fit for them," Millhouse said.

Under the deal, PeopleSoft will exchange .825 shares for each outstanding share of Vantive, which had revenue of $163 million in 1998. The transaction has been approved by the boards of each company, but is subject to the approval of Vantive's stockholders and regulators. The deal is expected to close in the first quarter of 2000.

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